Do you have a great business idea? Does the thought of being your own boss appeal to you?
If so, you should consider becoming an entrepreneur. You could join the 582 million entrepreneurs in the world, turning their business ideas into a reality.
One of the most important parts of starting a business is getting enough funds. If you want to know how to get a startup business loan, you’re in the right place.
Keep reading to discover what you need to do to obtain a business loan.
One of the most popular ways small businesses secure funding and get a startup loan is through the U.S. Small Business Administration’s microloan program.
SBA loans can reach up to $50,000 or more, although the average loan is around $13,000.
The SBA approves lenders and allows them to make loans under SBA programs. These loans typically have lower interest rates as well.
One of the most popular options is the SBA 7(a) loan, which provides financial assistance to small businesses with special requirements. The maximum loan amount for an SBA 7(a) loan is $5 million.
Personal Business Loans
You might also want to consider a personal loan. This type of business loan is often offered by online lenders.
Your personal credit history affects your options. If your startup is brand-new, this might be an easier option to qualify for.
Keep in mind that this type of startup loan can have high APRs, sometimes as high as 36%. Again, your credit score will affect your options and the loan’s APR.
You can also find microloans for startups outside of the SBA program. Microlenders give startup businesses the option to acquire funding in smaller amounts.
You can find local microloan lenders, often through non-profit organizations. Other lenders include Kiva and Accion.
You can likely get better terms securing a microloan than you would from a private lender.
Other Ways to Get a Startup Business Loan
Microloans and personal loans aren’t your only options for securing financing.
You can find small business grants from government agencies and private foundations. Small business grants can be a little tough to acquire, but it’s free capital.
You might also want to consider crowdfunding to raise funds. Lately, this has become a popular way for startups to gather funding. Crowdfunding websites like Indiegogo and Kickstarter can help you collect money through online campaigns.
You can also turn to your friends and family for assistance. Borrowing money from friends or family members allows you to set your own repayment terms. Just make sure you pay them back, as failure to repay these loans can result in fractured relationships.
Consider equipment financing and business credit cards as other ways to secure funding for your business as well.
Ways to Lower Costs
You should also consider ways to cut costs, especially in the beginning. One way to do so is to hire customer service representatives on a website like FreeUp. This is a great way for entrepreneurs to grow while keeping costs low.
Keep track of your expenses, especially any that you can claim on your taxes.
Grow Your Business
If you’re wondering how to get a startup business loan, start with these tips. You might want to consider looking into a few different financing options for the best chance of success.
Are you looking for more ways to grow your startup business? We have tons of marketing, finance, and other startup advice for every entrepreneur. Check out our other posts before you go.